Top executives from both companies revealed Thursday that AFG had signed a 15-year lease for 22 floors, or two-thirds of the structure, to be called the Great American Insurance Building at Queen City Square.
It will be Cincinnati's tallest structure, rising 660 feet - well above the 574-foot Carew Tower and altering the downtown skyline with its signature "tiara" after its completion in 2011.
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"This is going to be the building that you see on Monday Night Football," Western & Southern chairman John F. Barrett said in an interview.
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The deal means that AFG, the insurance company controlled by the family of financier Carl Lindner, will move most of its operations into the new building. It will keep its official headquarters in the National City building on Fourth Street.
AFG's move into the building - which also will have 25,000 square feet of street-level retail space and a 1,400-space parking garage - might also have saved more than 2,000 jobs from leaving downtown. The company has about 2,500 workers, or 40 percent of its total work force, in five buildings. Co-presidents S. Craig Lindner and Carl H. Lindner III had considered developing land in Mason to consolidate the company's operations there. Instead, they will likely move into the new space.
"There are a lot of inefficiencies when you are that spread out," Carl Lindner III said. Many AFG employees live closer to downtown or in Northern Kentucky and would have an easier commute to a new city location than to Mason, he said.
Still, AFG officials said the company - the parent of Great American Insurance Co. and Great American Financial Resources - might yet build in Mason and expand there.
Some of the downtown AFG employees are in leased space, such as the 580 Building on Walnut Street. AFG's move could increase office vacancy rates downtown, although the three years between the start of construction and when the new building will be occupied will give the 580's owners time to find new tenants.
Elected officials applauded the official announcement of the new tower.
"Anytime a new tallest building is built in a city, it is a clear sign of progress," Mayor Mark Mallory said in a statement.
AFG will lease 530,000 square feet of the 825,000 square feet of space in the building, designed by the architectural firm of St. Louis-based Hellmuth, Obata + Kassabaum. The main entrance for the building will be a rotunda at the southeast corner of Fourth and Sycamore. Construction will begin in the spring, after demolition of a 1,500-space parking garage at Third and Sycamore that Western & Southern owns.
AFG signed the lease for Western & Southern's new building about a week ago, Barrett said. Securing the lease was crucial in clearing the way for Western & Southern to build the project, which had been on the drawing board for almost two decades without movement.
Since real estate lenders view leases as collateral, pre-leasing major portions of new office buildings is important. Barrett would not comment on how the project - with an estimated price tag of more than $300 million - will be financed. But he hinted that funding could be structured similarly to that of its 303 Broadway building, which opened in 2005 in what then was the first office building constructed downtown in 14 years.
That project was bankrolled in part by using bonds issued by the Port of Greater Cincinnati Development Authority, which Western & Southern eventually bought.
Thursday's announcement was made under the exposed steel beams of 303 Broadway's 16th-floor space that Barrett said is part of the last 5,000 square feet in that building which hasn't been leased.
Though primarily in the insurance and financial services businesses, Western & Southern has grown into one of Cincinnati's key downtown developers. In many instances, the company has spent more of its own money as a percentage of development costs than is customary in big real estate deals.
When subsidiary Eagle Realty built 303 Broadway at a cost of $62.5 million, it did so with $45 million in port authority bonds. Eagle bought $10 million of the bonds itself, and covered the other $35 million by signing the building over to the port and leasing it back.
Western & Southern also has the rights to develop the vacant parcel at Fifth and Race streets across from the downtown Macy's and Saks Fifth Avenue stores. Of the estimated $103 million it will cost to build the condo-retail-parking structure Eagle has proposed there, Barrett said his company could spend about $90 million.
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source: news.enquirer.com
